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In February 2018, B.C. Finance Minister Carole James announced that it was the stated policy of her government to force down home prices. Together with a suite of initiatives announced at that time, she made it clear that the policy of the NDP wasn’t just to moderate home-price increases, but to enact whatever policy initiatives were necessary to bring them down.

With this announcement, B.C. entered unchartered territory. For the first time in history, a government in Canada announced that its policy was to reduce the wealth of its constituents. About 68 per cent of British Columbians own their own homes and for the vast majority it’s the primary repository of their wealth and savings.

Every homeowner assumes considerable personal financial risk in buying their home, and most worked diligently to slowly pay down large mortgages. These purchasers knew that marketplace corrections were part of the risk they assumed. Few expected that their government would wilfully set out to destroy what they had worked to accumulate.

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There were, of course, reasons for the NDP’s policy. Home prices had risen rapidly, creating often insurmountable barriers to ownership for new buyers. British Columbians were angry and blaming foreigners and their foreign money. Something had to be done.

But, almost a year and half later, it is worth assessing our government’s policy to see how it’s doing so far?

First, it can’t be denied that it has been wildly successful. Never in history has B.C. lost so much wealth so quickly. Recent reports are that $90 billion has been lost in home value, just in Metro Vancouver, just over the past year. This figure is roughly 65 per cent of the entire annual economic output of the region, which has a GDP of $137 billion. It represents about $40,000 for every resident of Metro in the year, almost matching average annual salaries.

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What is the key to this success? It’s that no rational person would make an investment into an asset where it’s the stated policy of the government to make that asset worth less. Some observers point to other drivers of B.C.’s housing correction, especially federal government tightening of mortgage lending rules. However, the Greater Toronto Area has absorbed the federal changes and the market there remains healthy. The key ingredient in B.C. is that there is no reason to believe the market will recover so long as it’s the policy of the government to ensure that it doesn’t.

Second, the real-estate development and construction industries — more than 20 per cent of B.C.’s economy — are facing a significant downturn. MLA Advisory’s April 2019 Pre-Sale Real Estate Insights reports that about 5,000 concrete units within 17 development projects have been postponed. Housing starts are down by at least 20 per cent. Further project cancellations are announced weekly. Billions in investment has already been lost, with job losses and an associated decline in economic activity to follow.

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Third, one is hard-pressed to find the winners of this policy. Despite the massive wealth destruction and economic damage, few Millennials are now celebrating that they can finally afford a home. Nor would it make sense for any of them to buy one so long as it’s the stated policy of their government to destroy the savings they invest.

For the believers in the policy, the argument is that the benefits of the policy haven’t been realized yet because it hasn’t gone far enough. Surely, they believe, we can eventually wealth-destroy our way out of the housing affordability problem.

Norm Streu is president and COO of LMS Reinforcing Steel Group, a top company in the reinforcing steel industry with extensive operations throughout Western Canada and the U.S. He served as chairman of the board of the Vancouver Regional Construction Association and director of the B.C. Construction Association.

Letters to the editor should be sent to sunletters@vancouversun.com. The editorial pages editor is Gordon Clark, who can be reached at gclark@postmedia.com.

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